Introductory remarks on Microsoft's compliance with
March 2004 antitrust
decision

Press conferenceBrussels, 22nd October
2007

Ladies and Gentlemen

I want to report to you today that Microsoft has finally agreed to comply
with its obligations under the 2004 Commission decision, which was upheld last
month by the Court of First Instance.

I have been in almost daily contact with Steve Ballmer over the last two or
three weeks. As a result of final contacts that took place early this morning, I
am now in a position to present to you the results of those highly constructive
conversations.

Under the 2004 decision, Microsoft is obliged to provide information allowing
third party developers of work group server operating systems to develop
products that interoperate with the Windows desktop operating system. Microsoft
has previously offered to license this information to developers on terms that
the Commission thought wholly unreasonable.

Following our intensive discussions, Microsoft has now made substantial
changes to its provision of this information, introducing the changes that I
asked for.

I told Microsoft that its royalty rates were too high for the patents they
claim are applicable to the interoperability information. In response, Microsoft
has slashed its requested royalties for a worldwide licence, including patents
from 5.95% to 0.4% - less than 7% of the royalty originally claimed.

I told Microsoft that the royalties for access to its secret interoperability
information were unreasonable and had to be reduced. Microsoft has now abandoned
its demand for a royalty of 2.98 % of revenues from software developed using
licensed information. That percentage royalty has become a nominal, one-off
payment of €10 000. This is all that has to be paid by companies that
dispute the validity or relevance of Microsoft's patents.

The Commission will now adopt a decision as soon as possible on the pending
non-compliance case regarding past unreasonable pricing for the
interoperability information, on which the Commission sent a Statement of
Objections on 1 March 2007.

I told Microsoft that it had to make interoperability information available
to open source developers. Microsoft will now do so, with licensing terms that
allow every recipient of the resulting software to copy, modify and redistribute
it in accordance with the open source business model.

I told Microsoft that it should give legal security to programmers who help
to develop open source software and confine its patent disputes to commercial
software distributors and end users. Microsoft will now pledge to do so.

I told Microsoft that developers who sign licensing agreements with them
should have the means to ensure respect for the 2004 decision. Microsoft has now
accepted that it must give legally binding guarantees to licensees about the
completeness and accuracy of the information it provides and that the licensee
can obtain effective remedies, including damages, from the High Court in London.
These private enforcement tools come on top of the Commission’s powers and
continued vigilance to ensure that Microsoft complies with its obligations in
this area as in others.

I also said that Microsoft had to provide complete and accurate technical
documentation – and backed that demand with additional fines last year. I
can now say that Microsoft has substantially respected this obligation. That
said, Microsoft’s obligation to document its protocols is an ongoing one
– the documentation needs to be maintained as its products evolve, and new
issues may arise once it is being used by developers. But as of today, the major
issues concerning compliance have been resolved.

Put together, these changes in Microsoft's business practices, in particular
towards open source software developers, will profoundly affect the software
industry. The repercussions of these changes will start now and will continue
for years to come.

The Commission's 2004 decision set a clear precedent against which
Microsoft's anti-competitive behaviour could be judged. Now that Microsoft has
agreed to comply with the 2004 Decision, the company can no longer use the
market power derived from its 95% share of the PC operating system market and
80% profit margin to harm consumers by killing competition on any market it
wishes.

Today's changes to the implementation of that decision set a second clear
precedent. When Microsoft illegally uses its market power to destroy competition
on a market, the onus is on Microsoft to change its business practices to allow
competition and innovation to be restored to the market, so consumers are given
the choices to which they are entitled.

Microsoft has finally taken steps to comply with the 2004 Decision. However,
I want to stress two points.

First, Microsoft has ongoing obligations to continue to comply with the 2004
Decision. If new issues arise in relation, for example, to the completeness and
accuracy of the interoperability information, then Microsoft must address those
issues immediately.

Second, the March 2004 Decision, as confirmed by the Court of First Instance
last month, also sets a precedent with regard to Microsoft's future market
behaviour in this and other areas. Microsoft must bear this in mind.